Communication on the future of the CAP The CAP towards 2020: meeting the food, natural resources and territorial challenges of the future Tassos Haniotis, Director Agricultural Policy Analysis and Perspectives DG for Agriculture and Rural Development European Commission C Olof S.
The CAP today budget relevance Markets Direct payments Modulation Rural Development 2
CAP expenditure and CAP reform path (2007 constant prices) 70 60 50 40 30 20 10 0 billion 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 % GDP EU-10 EU-12 EU-15 EU-25 EU-27 2008 2009 0,7% 0,6% 0,5% 0,4% 0,3% 0,2% 0,1% 0,0% Export subsidies Other market support Coupled direct payments Decoupled direct payments Rural development % of EU GDP Source: European Commission - DG Agriculture and Rural Development 3
Alternative views on the cost of the CAP 140 CAP cost in 2009 (in absolute terms) 60% CAP cost in 2009 (in relative terms) 120 100 80 60 40 41% of EU budget 50% 40% 30% 20% 0.5% of EU GDP 20 10% 0 Billion of euros 0% % of GDP CAP expenditure EU budget CAP expenditure All EU public expenditure Source: European Commission - DG Agriculture and Rural Development 4
3. Why do we need a reform? To respond to challenges ahead Economic challenges Food security Price variability Economic crisis 5
Recent evolution of agricultural input and output prices 110 (index 1996 = 100, in real prices) 100 90 80 70 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Output prices - EU-27 Input prices - EU-27 Source: Eurostat 6
3. Why do we need a reform? To respond to challenges ahead Economic challenges Food security Price variability Economic crisis Environmental challenges GHG emissions Soil depletion Water/air quality Habitats and biodiversity Territorial challenges Vitality of rural areas Diversity of EU agriculture Equity and balance of support Contribution to Europe 2020 strategy 7
4a. What are the objectives with the reform? Economic challenges Environmental challenges Territorial challenges Viable food production Sustainable management of natural resources and climate action Balanced territorial development Common EU response needed 8
4b. What policy instruments? Better targeted to objectives Based on two pillar structure Direct payments Redistribution Better targeting Redesign: Greening of direct payments Capping of payments Small farmers support Areas with specific natural constraints 9
EUR/ha 800 700 600 500 400 300 200 100 0 Malta Average direct payments per potentially eligible area and beneficiary Direct payments net ceilings fully phased-in (in 2016) Belgium Netherlands Italy Greece Cyprus Denmark Slovenia Germany France EU-15 Luxembourg EU-27 Ireland Austria Source: European Commission - DG Agriculture and Rural Development Hungary Czech Republic Spain Finland Sweden United Kingdom Bulgaria DP net ceilings fully phased-in (EUR/ha) EU-27 average (EUR/ha) DP net ceilings fully phased-in (EUR/beneficiary) Poland EU-12 Slovakia Romania Portugal Lithuania Estonia Latvia EUR/ben. 48000 40000 32000 24000 16000 8000 0 10
4b. What policy instruments? Better targeted to objectives Based on two pillar structure Direct payments Redistribution Better targeting Redesign: Greening of direct payments Capping of payments Small farmers support Areas with specific natural constraints Market measures Market orientation Streamline and simplification Improved food chain functioning 11
Slow, limited, asymmetric price transmission along the food supply chain 120 FOOD PRICE CRISIS PRODUCERS LAG RETAILERS LAG STABILISATION 115 110 Agricultural commodity prices Food producer prices Food consumer prices 105 100 Overall inflation (HICP) 95 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Source: European Commission DG Economic and Financial Affairs, based on Eurostat data 12
4b. What policy instruments? Better targeted to objectives Based on two pillar structure Direct payments Market measures Rural development Redistribution Better targeting Redesign: Greening of direct payments Capping of payments Small farmers support Areas with specific natural constraints Market orientation Streamline and simplification Improved food chain functioning Environment, climate change and innovation as guideline themes Improved coherence with other EU policies More effective delivery mechanisms Address risk management New distribution criteria 13
4c. What policy options? Option 1 Continue the gradual reform process Adjust the most pressing shortcomings (e.g. more equity in the distribution of direct payments) Option 2 Capture the opportunity for reform More sustainable and balanced CAP (between policy objectives, MS and farmers) More green targeted measures Option 3 More fundamental reform Focus on environmental and climate change objectives through rural development Move away from income support and most market measures 14
5. Next steps Inter-institutional debate on the Communication Preparation of Impact Assessment (IA) In-depth Commission analysis of new policy settings, options and their economic, social and environmental impacts Stakeholders consultation: analytical contributions from stakeholders based on Consultation document published on the 23th of November Preparation of Legal Proposals Legal proposals presented by mid-2011 15
For further information The CAP after 2013 http://ec.europa.eu/agriculture/cap-post-2013/index_en.htm The Communication on the future of the CAP http://ec.europa.eu/agriculture/cap-post-2013/communication/ index_en.htm Public consultation http://ec.europa.eu/agriculture/cap-post-2013/consultation/ index_en.htm 16
Thank you 17